The U.S. government is contemplating criminal charges against Dragonfly Capital's Tom Schmidt and other partners related to their investment in Tornado Cash developer Pepper Sec. At a criminal trial for Tornado Cash's Roman Storm, prosecutors indicated that they are conducting an investigation into Schmidt's involvement, which includes a subpoena and a search of his home. Dragonfly's co-founder, Haseeb Qureshi, stated they have fully cooperated with the investigation and expressed confidence in their legal compliance but expect to vigorously defend against charges. The case raises significant questions about the accountability of software developers for activities associated with their platforms. Tornado Cash, created in 2019, hides the origins of cryptocurrency transactions and has faced scrutiny for alleged facilitation of money laundering. Storm is charged with operating an unlicensed money-transmitting business and may face up to 45 years in prison, igniting debate around user privacy and developer responsibility in the crypto space.

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